Monday, December 7, 2015

Put Student Debt Report Recommendations to Work at Your School

Submitted by: Angela
Henry, USA Funds Account Executive

The
Institute for College Access & Success’ 10th annual report onstudent debt at graduation has a host of valuable findings and recommendations — and serves as a great
starting point for developing action items to address default prevention at
your school.

“StudentDebt and the Class of 2014” has new national, state-by-state and college-level findings about recent
bachelor’s degree recipients and a look at 10-year trends. First, a few key
findings from the report worth noting:

Seven
in 10 graduates of public and private institutions in 2014 had student loan
debt, the same figure as that for 2013 graduates. In 2014, private student
loans comprised about one-sixth of that debt.

Per-graduate
borrowing averaged $28,950 for 2014 graduates, up 2 percent from the 2013
average of $28,400.

Graduates
from 2014 were more likely to have student loan debt than were 2004 graduates,
with 69 percent of 2014 graduates in debt compared with 65 percent of 2004
graduates.

The
level of debt for 2014 graduates was much higher than that for 2004 graduates.
The $28,950 average debt at graduation for 2014 graduates represents an
increase of 56 percent when compared with 2004’s average of $18,550. That
increase is more than double the rate of inflation over that period.

Tough
economic times during the period between 2004 and 2014 have had an impact on
borrowers’ ability to repay student debt. Each year between 2004 and 2008, the
unemployment rate for recent college graduates was below 6 percent. But since
the end of a recession in 2009, each year that unemployment rate has been
greater than 7 percent. Unemployment for young college graduates in 2014 was
7.2 percent.

The
report notes that, while its focus is on the debt of students who recently
graduated from college, “the borrowers who struggle most to repay their loans
are those who do not graduate.” Also, “completers are more likely than
noncompleters to be paying down their debt.”

As
the report points out, federal student loans make college possible for many
students. But rising debt levels can have a negative impact on students’
futures. The following are some of the policy recommendations from “Student
Debt and the Class of 2014” — and my thoughts on how you can help make these
recommendations a reality at your school:

Reduce the need to
borrow
— Find ways to incorporate information about students’ many options for financial
aid before they begin school and throughout their time at your institution. From
new-student orientation to required and supplemental loan counseling, include
messages about reduced reliance on borrowing.

Help keep loan payments
manageable
— Make sure your student loan counseling sessions include information about all
of the flexible federal student loan repayment options — including the Revised
Pay as You Earn (REPAYE) repayment option.

Help students and
families make informed choices — Provide financial literacy and student
success training to students throughout their academic career and beyond.

Reduce private loan
borrowing
— For students who must borrow to cover the cost of their education, encourage
them to pursue federal loans before considering private loans — which typically
are costlier and offer fewer consumer protections.